Pharma

Healthcare venture investments surge in Midwest — especially in biopharmaceuticals

The biopharmaceuticals sector heated up in the Midwest in the first half of this year and accounted for half of the venture dollars put into the region’s healthcare companies, according to a new report from Cleveland-based BioEnterprise. The nonprofit business development group’s Midwest Health Care Venture Investment Report, released biannually, compiles venture investments reported through […]

The biopharmaceuticals sector heated up in the Midwest in the first half of this year and accounted for half of the venture dollars put into the region’s healthcare companies, according to a new report from Cleveland-based BioEnterprise.

The nonprofit business development group’s Midwest Health Care Venture Investment Report, released biannually, compiles venture investments reported through government filings, news stories, press releases and other bioscience organizations. In the first half of 2012, 92 Midwestern healthcare companies reported raising $491 million, up from the 86 companies that reported $315 million raised in the first half of last year.

Accounting for $246 million of those venture investment dollars were (PDF) biotech companies led by Illinois’ Horizon Pharma ($50.8 million series C round), Kentucky’s Xanodyne Pharmaceuticals (raising $25.9 million), Ohio’s Juventas Therapeutics ($22.2 million second round), and Michigan’s AaStrom Biosciences ($40 million B round).

That’s interesting given the recent Dow Jones report on national venture investment trends that found that U.S. biopharmaceutical companies raised 43 percent less in venture capital in the second quarter of 2012 compared to the previous year.

But at the same time, in the first half of 2012, we’ve seen biopharmaceutical venture investor Frazier Healthcare raise a new $400 million fund, GlaxoSmithKline and Johnson & Johnson launch a venture fund with Index Ventures, and Rex Healthcare make its inaugural venture investment in a pharmaceutical company.

Meanwhile, Midwestern medical device and software/service companies also saw an upswing in venture investments and received $142 million and $103 million, respectively.

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Geographically, Ohio led the region in deals, with companies like Juventas and ViewRay attracting $106 million. That’s up from the $80 million Ohio companies attracted in the first half of last year.

Minnesota followed with $86 million for companies including surgical device maker Zyga Technology, Inspire Medical Systems and Tenex Health. (The report also includes a $30 million series C raised by cleantech materials company BioAmber — but are we counting that as biomedical?)

Indiana healthcare companies saw nearly five times the venture dollars they saw in the first half of last year, with nine deals bringing $51.6 million. Strand Diagnostics’ $30 million series A accounted for a lot of that, but Esanex, the stealth-mode biotech that’s apparently reviving Serenex’s cancer drug, also raised $15 million.

BioEnterprise CEO Baiju Shah attributed the uptick in investor interest to an advancing pipeline of promising companies in the region.

[Photo from Wikipedia]